Lotus Announces Plans for New Manufacturing Facility

Lotus Pharmaceuticals (LTUS.OB) bought land rights to property in Inner Mongolia on which it will construct a manufacturing facility. Liang Fang Pharmaceutical Company, a China subsidiary of Lotus, paid 108 million RMB ($15.5 million) for the rights, of which 39 million RMB ($5.8 million) was paid to Cha You's Cha Ha Er Industrial Garden District.

Lotus anticipates building a 40,000 square meter facility on the property. It projects the facility will cost 160 million RMB ($23 million) and production machinery will add another 182 million RMB ($26.0 million) to the price. By contract, construction must begin by September 3, 2008.

Lotus has set aside 50 million RMB ($7.1 million) for working capital for the project. The remaining money for the facility will come from bank loans and government loans and grants. Several local government agencies have also agreed to waive user fees for the facility, and a package of tax abatements may be available. Lotus expects the facility to be completed and equipped by December 2010, with production starting after receiving government Good Manufacturing Practices [GMP] approval.

The first products planned for manufacture at the new factory include saline for intravenous use and blood plasma substitutes. Manufacturing and distribution of each product will require separate government approvals. Once its distribution network is enlarged, Lotus intends to produce prescription items for distribution to hospitals.

Disclosure: none.